ENGAGEMENT REPORT STATEMENTS, VOTES, DIALOGUES - SFC - SHAREHOLDERS FOR CHANGE ACTIVITIES IN 2020
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ENGAGEMENT Statements,
votes, dialogues
REPORT
SfC - Shareholders
for Change activities
in 2020
ENGAGEMENT REPORT Statements, votes, dialogues SfC - Shareholders for Change activities in 2020
CHALLENGING COMPANIES
IN CHALLENGING TIMES
“Two shareholder resolutions and over 100
engagement initiatives. SfC confirms its pioneering
role as engagement network”
W
hen we launched SfC - Shareholders for Change [SEE PAGE 35]
as European network for shareholder engagement*, three years
ago, we had two main objectives: keep a light structure and intro-
duce new issues and strategies in our dialogue with companies. Today we are Aurélie Baudhuin
happy to acknowledge that we are well on track on both targets. The two en- President of SfC - Shareholders for Change
gagement projects started by the network so far, based on our own research,
have been focussed on what we like to call “orphan issues”, that are still mar-
ginal in investor engagement strategies: tax avoidance in the telecommunica-
tion sector and the ESG risks linked to the extraction of rare metals.
As you will see in this report, our members have covered many such
issues, both in partnership with other SfC members or as “solo players”,
although on behalf and with the support of the whole network: forced la-
bour in the supply chains of European information and communication
technology companies (ICT), exposure to fossil fuels of CAT (catastrophe)
bonds issuers, governance issues at Japanese blue chip companies and
Italian small-medium caps with a strong ESG profile, engagement with a
government for acceding to the UN Biological Weapons Convention, etc.
This year our passion for engagement was put to the test by Covid-19.
In many of the countries in which we invest it was not possible to physi-
cally attend shareholders’ meetings or interact with the boards of direc-
tors of companies via online streaming. Some companies literally took
* For more information see SfC profile on page 38
ENGAGEMENT REPORT Statements, votes, dialogues 5
The first ever advantage of the pandemic to silence the often-critical voices of minority
climate resolution shareholders.
in France But we didn’t lose heart: in France, with an action led by Meeschaert
Asset Management and supported by two other SfC members, we sub-
mitted a shareholder resolution to the annual general meeting of Total
[SEE PAGE 21]: the first ever climate resolution presented in the country.
While comfortably sitting in front of a computer at home, during the lock-
down, a representative of Fondazione Finanza Etica has staged a resolu-
tion at the AGM of the fast fashion giant H&M [SEE PAGE 22], asking to
disclose the ESG criteria triggering the variable remuneration of senior
executives.
Despite the pandemic, we have been able to engage about 100 compa-
nies by sending letters and mails, submitting questions and resolutions at
AGMs and scheduling conference calls. In some cases, as you will see, our
dialogue with companies has been fruitful, in other cases it is still ongoing
or was unsuccessfully terminated and will be continued at next year’s an-
nual general meetings. Hoping that a physical attendance of shareholders
will be possible again.
WATCH VIDEO
6 ENGAGEMENT REPORT Statements, votes, dialogueskey
BKC Bank für Kirche und Caritas eG (Germany)
Ecofi Ecofi, Groupe Crédit Coopératif (France)
Etica Etica Sgr, Gruppo Banca Etica (Italy)
fair-finance fair-finance Vorsorgekasse (Austria)
FFE Fondazione Finanza Etica (FFE, Italy)
Fundación Fundación Finanzas Eticas (Spain)
Meescahert Meeschaert Asset Management (France)
Ethos Ethos. Swiss Foundation for Sustainable
Development (Switzerland)
Friends Provident Friends Provident Foundation (UK)
Forma Futura Forma Futura Invest Inc. (Switzerland)
ABS Alternative Bank Switzerland (Switezerland)100 companies
and one country
engaged in 2020
100 companies and one country (Namibia) have been engaged in 2020,
for a total of 104 engagement initiatives (since four companies
have been engaged twice, on different issues). The most recurring issues of
SfC’s members questions, resolutions or votes have been related to climate/
environment (32%), governance and remuneration of managers (26%), human
rights/worker rights (25%) and tax practices (11%). Over 80% of engaged com-
panies are based in Europe, mainly in Italy, Germany, France, Spain and UK.
About a third of all engaged companies belongs to the Oil&Gas/Energy
sector, including also utilities and renewable energy producers.
Breakdown
of SfC engagement
initiatives in 2020
32%
by issue
26% 25% 4%
11% 3%
Climate/ Governance/ Human rights/ Tax Controversial Consumer
environment remuneration workers right practices weapons rights
ENGAGEMENT REPORT Statements, votes, dialogues 9BREAKDOWN OF TOTAL Italy 18%
SfC ENGAGEMENT INITIATIVES Germany 16% 15 - 20
BY COUNTRY IN 2020 France 12%
(in %) USA 9%
Japan 9%
Spain 8% 10 - 14
UK 6%
Sweden 5%
Finland 4%
5-9
Switzerland 3%
Belgium 2%
100
Denmark 2%
Netherlands 2% 1-4
companies
Austria 1%
1
China 1%
country Ireland 1%
Namibia 1% 0
engaged in 2020 Russia 1%
10 ENGAGEMENT REPORT Statements, votes, dialoguesBREAKDOWN OF TOTAL Oil&Gas/Energy 33
SfC ENGAGEMENT INITIATIVES
BY SECTOR IN 2020 Capital goods 18
(in %) Technology/IT 13
Consumer goods 10
Services 7
Automotive 6
Banking/Finance 6
104 engagement Telecommunication 4
initiatives Defence 2
in total in 2020
Pharma 2
(four companies have been
engaged twice, on different issues) Country 1
How SfC members interact when engaging with companies
SfC - Shareholders for Change engages with companies participating in
AGMs, meetings and calls or submitting questions via mail or letter.
There are three ways in which SfC members can be involved in en-
gagement activities:
engagement led by a single member engagement led by a single member
network-driven with the participation of one or more on behalf of the whole network
engagement other members (member-driven but without the explicit, joint participation
with explicit support) of any other member
In the following sections we will explain the three different strategies
in more detail and list all engagement activities of the network in 2020 for
each kind of strategy.
ENGAGEMENT REPORT Statements, votes, dialogues 11SfC’s engagement results in 2020 Not successfull (examples)
Ericsson
Luckin
70.2%
Coffee
ongoing Merck
Neste Oil
OMV
13.5% Repsol
Successfully
completed Tatneft
Total
8.7% Valero Answers were
not satisfactory
Completed/
divestment
Divestment*
4.8% *Divestment is just one possible strategy.
Each member decides autonomously how to behave in such
Completed cases, according to its own engagement process.
(but open Refer to the network engagement strategy page 36.
questions)
Never replied
Orange
2.9%
to questions
Not Questions TO SUBMIT
successfull at AGM 2021
12 ENGAGEMENT REPORT Statements, votes, dialogues1. Network-driven engagement Joint engagement
on tax transparency
A network-driven engagement is launched on the basis of researches
done by the SfC network. In the first three years of SfC’s activity, two such
and rare metals
researches were published: one, in December 2018, on the fiscal respon-
sibility of European telecommunications companies and another in July
2019, on the social and environmental risks associated with the use of rare
metals in certain specific production processes.
The first research “Bad Connection”, exposed the general lack of tax
transparency in the European telecommunications sector and targeted
four companies: Deutsche Telekom (Germany), Orange (France), Tele-
com Italia (Italy) and Vodafone (UK). For each of the four companies, a
member of SfC has taken the lead of the engagement process, while, in
some cases, other members have joined as supporter. The “Bad Connec-
tion” engagement, launched at the beginning of 2019, was completed in
June 2020 with the publication of a report including the most significant
engagement results. All companies have been engaged sending ques-
tions via mail and, in the case of Deutsche Telekom, organising a call
with the management.
Bad Connection
Company Lead Supporter Status
Deutsche Telekom Etica Completed
BKC
(Germany) FFE (some questions remain open)
The company did not respond.
Orange
Meeschaert - Engagement will continue at AGM
(France)
in 2021
Telecom Italia Completed
Ecofi -
(Italy) (some questions remain open)
Vodafone Completed
Friends Provident Etica
(UK) (some questions remain open)
ENGAGEMENT REPORT Statements, votes, dialogues 13???
???
“Bad Connection”: engagement results
???
In June 2020, SfC has published a report on and engaged in a dialogue with SfC. While
its engagement with European telecom- Vodafone is already publishing CbCR data,
munication companies Deutsche Telekom, neither Deutsche Telekom nor Telecom
Orange, Telecom Italia and Vodafone, based Italia committed to publishing such in-
on the research “Bad Connection”. formation. However, Vodafone’s trans-
A letter was sent to the companies at the parency on CbCR revealed a tax planning
beginning of 2019, asking to publish coun- strategy that is apparently more aggres-
try-by-country reporting (CbCR) data and sive than that of Deutsche Telekom and
explain the role of certain subsidiaries Telecom Italia.
based in low tax jurisdictions. Taxation expert Tommaso Faccio (Universi-
All companies - except for the France- ty of Nottingham), co-founder of Tax Justice
based Orange, that never replied - were cooperative Italia, supported the engagement process.
TABLE 1 Summary of SfC’s engagement with four major European telecommunication companies
Company Issues Dialogue Results
Vodafone Alleged aggressive tax planning The company was cooperative The company does already
and profit shifting and answered to SfC’s letter publish CbCR data but does
to Luxembourg and Malta. and mails providing the not envisage to relocate some
requested information. of its Luxembourg activities
to the UK, as suggested by SfC.
Its tax strategy appears
to be more aggressive than that
of Deutsche Telekom
and Telecom Italia.
Deutsche Telekom Request to publish country The company was very open The company does not envisage
by country reporting data to dialogue and provided SfC to publish CbCR data. Based
in the group’s financial with detailed answers. on the provided information,
statements and clarify the role of A conference call was organised all intragroup transactions
its subsidiaries with DT’s tax managers. are taxed in Germany and DT’s
in Luxembourg, Netherlands and tax strategy does not appear
Cyprus. to be particularly controversial.
14 ENGAGEMENT REPORT Statements, votes, dialoguesCompany Issues Dialogue
??? Results
???
Telecom Italia Request to publish country The company was open ??? The company does not envisage to
by country reporting data to dialogue and provided SfC publish CbCR data, at least not in
in the group’s financial statements with detailed answers. the short term. Based on the
and clarify the role of its provided information, Telecom
subsidiaries in Luxembourg, Italia’s tax strategy does not appear
Netherlands, Ireland and Panama to be particularly controversial.
Orange Request to publish country by The company wasn’t SfC will evaluate the opportunity
country reporting data in the cooperative and never replied to submit the “Bad Connection”
group’s financial statements and to SfC’s questions. questions at the company’s
clarify the role of its subsidiaries in Annual General Meeting in 2021.
Luxembourg, Netherlands, Ireland,
Singapore, Panama and UK.
The second research, “Rare metals supply chains”, published by Mee-
schaert Asset Management on behalf of SfC, identified 12 companies po-
tentially exposed to risks related to the extraction and use of rare metals:
• Wind power sector:
-- Vestas (Denmark)
-- Siemens-Gamesa (Spain)
-- Orsted (Denmark)
-- Iberdrola (Spain)
-- Nordex (Germany)
• Automotive sector:
-- PSA (France)
-- Renault (France)
-- Daimler (Germany)
-- BMW (Germany)
• Chemical sector (associated with electric cars)
-- Johnson Matthey (UK)
-- Umicore (Belgium) A sustainable
-- Solvay (Belgium). transition
to a low carbon
economy
ENGAGEMENT REPORT Statements, votes, dialogues 15All companies are being engaged by submitting questions via mail
and, in two cases, during conference calls (as was the case for Renault and
Daimler in 2020).
Company Lead Status
Vestas
Etica Successfully completed
(Denmark)
Siemens-Gamesa
Ethos Ongoing
(Spain)
Orsted
Etica Ongoing
(Denmark)
Iberdrola
Fundación Ongoing
(Spain)
Nordex
ABS Successfully completed
(Germany)
PSA
Meeschaert Ongoing
(France)
Renault Ecofi
Ongoing
(France) (support from BKC and Forma Futura)
Daimler Ecofi
Ongoing
(Germany) (support from BKC, FFE)
BMW
BKC (support from Ecofi) Successfully completed
(Germany)
Johnson Matthey (UK) Etica Successfully completed
Umicore
Forma Futura (support from Etica) Successfully completed
(Belgium)
Solvay
Meeschaert Ongoing
(Belgium)
16 ENGAGEMENT REPORT Statements, votes, dialogues???
Ecofi engages Daimler with BKC and FFE ???
???
On July 30, SfC’s members Ecofi, Bank für Kirche und gram covers both downstream (from battery manu-
Caritas and Fondazione Finanza Etica engaged the facturers to refineries) and upstream (from mines to
German automotive company Daimler on issues re- refineries) suppliers. Moreover, Daimler has commit-
lated to the sourcing of rare metals, during a confer- ted to evaluate 70% of suppliers of all high-risk raw
ence call. materials by 2025 while it aims to define measures for
“During the call we have asked Daimler more than 20 addressing 100% of raw materials linked to high risk
questions, mainly on the auditing of its cobalt supply of human rights violations by 2028.
chain, the assessment of related risks and the dialogue “This is certainly a good level of commitment”, added
with relevant stakeholders”, explains Cesare Vitali, Vitali. “However, on some issues, such as a possible stop
head of ESG research at Ecofi, who is leading the en- to the import of Congolese cobalt, associated to a high
gagement with the company. risk of human rights abuses, the company has not given
Daimler has been cooperative and appears to be on a clear answer yet”.
the right path to a sustainable sourcing of rare metals. The engagement with Daimler will continue through-
It explained to have charged an external firm, in 2019, out 2021. The company has invited Shareholders for
with a three-year audit of its cobalt supply chains for Change’s representatives to its headquarters in Stutt-
battery cell suppliers of Mercedes-Benz AG. The pro- gart for a more comprehensive dialogue.
2. Engagement led by a single member with the
participation of other members
In this second engagement strategy, a single member of SfC (lead) launch-
es an engagement project with a company, based on its own research and
evaluations and one or more SfC members may join as supporter (nor-
mally because they have an interest in the company, e.g. they are invested
or plan to invest in future). Supporters may help the lead member drafting
letters, propose to add further questions for calls, meetings and mails,
participate in calls with companies organised by the lead, attend and vote
at AGMs.
Writing letters,
asking questions,
attending AGMs.
Together
ENGAGEMENT REPORT Statements, votes, dialogues 17Company Lead
???
Supporter Issues Actions Status
???
??? Questions
Completed.
Company excluded
Ericsson Corruption
Forma Futura ABS submitted via from FF’s
(Sweden) investigations in the US
letter investment
universe
CO2 emissions in
Heidelberg Questions
Sweden; Successfully
Cement Forma Futura BKC, Ecofi submitted via
Alleged human rights completed
(Germany) letter
abuses in Palestina
Alleged use of forced Questions Completed
Adidas
Forma Futura BKC, Ecofi labour in China; submitted via (some questions
(Germany)
living wage. letter remain open)
Questions
Nokia Alleged use of forced Successfully
Forma Futura BKC, Ecofi, Etica submitted via
(Finland) labour in China. completed
letter
Assicurazioni Questions
Investment in coal
Generali Forma Futura BKC, Ecofi, FFE submitted via Ongoing
plants
(Italy) letter
Deutsche Post Alleged anti-union Questions
Successfully
- DHL Forma Futura BKC, Ecofi, Etica practices in South submitted via
completed
(Germany) Korea letter
Forma Futura, one of SfC’s Swiss members, based in Zurich, engages
companies on alleged controversies assessed by the internal Sustainabil-
ity Research Team with the help of external research providers. Engage-
ment projects are typically developed submitting questions to the compa-
nies via letter, mail, meetings or calls. These communications are sent also
on behalf of SfC and other SfC members may co-sign or participate in the
calls. Forma Futura doesn’t attend companies’ AGMs.
18 ENGAGEMENT REPORT Statements, votes, dialoguesCompany Lead Supporter Issues
???
Actions Status
???
Repsol* Oil drilling in the ???
Questions
Fundación Ecofi submitted at Ongoing
(Spain) Mediterranean.
AGM.
Questions
Sanofi Aventis ABS, Forma Access to medicines,
EcoFi submitted via Ongoing
(France) Futura products safety issues.
letter.
Scottish and
Questions
Southern Friends Just transition to Successfully
BKC, Ecofi, Etica submitted at
Energy (SSE) Provident net-zero emissions. completed
AGM.
(UK)
Questions
EDF Friends Just transition to
Ecofi submitted via Ongoing
(France) Provident net-zero emissions.
letter.
Scottish Power Questions
Friends Just transition to
(Iberdrola) Ecofi submitted via Ongoing
Provident net-zero emissions.
(UK) letter.
* Critical shareholding was adopted with Repsol.
Friends Provident Foundation, SfC’s UK member, based in York, has
been engaging European utilities on the just transition to net-zero emis-
sions for three years. The most recurrent question, submitted via letters
or at AGMs is:
“Would you consider the adoption of a formal “just transition strategy”
that addresses the socioeconomic implications of your company’s net-ze-
ro ambition and decarbonisation strategy on workers, communities, supply
chain and consumers in a way that mitigates negative impact and enhances
the opportunities of the energy transition?”.
In August 2020, Scottish and Southern Energy announced that it will
adopt a “Just transition plan” following pressure from Friends Provident
Foundation and SfC. SSE formal adoption and public disclosure of a just
transition plan is a global first for an energy utility.
The first “Just
transition plan”
for an energy utility
at global level
ENGAGEMENT REPORT Statements, votes, dialogues 19???
??? oil drilling in the Mediterranean
Repsol asked to quit
???
ny because, “despite its history of accidents and oil spills
to the sea”, is asking to renew its concessions off the
Ebro river delta, without evaluation of environmental
impact.
Repsol is the only company that extracts oil from the
marine subsoil in Spain. The area in which oil drilling
takes place is a key environment for endangered spe-
cies such as Balearic Shearwaters and for the migra-
tion of cetaceans.
The three organisations pointed out that Repsol’s oil pro-
duction in the area is equal to 0.07% of national demand.
Therefore, the extraction activity, besides being danger-
On 8 May 2020, Fundación Finanzas Eticas, Ecofi and ous for the environment, would also be unnecessary.
the Spanish environmental organisation Alianza Mar SfC members considered “unsatisfactory” the an-
Blava submitted questions at the AGM of Spanish swers given by the company. The engagement with
Oil&Gas company Repsol. They criticised the compa- the company will continue in 2021.
Company Lead Supporter Issues Actions Status
16.8% votes in
Shareholder
favour.
Total Ecofi, Friends Alignment to Paris resolution
Meeschaert Dialogue with the
(France) Provident Agreement submitted at
company is
AGM
ongoing
3.6% votes in
favour (16% of
Shareholder shares not held by
ESG criteria in
H&M resolution controlling
FFE Meeschaert remuneration.
(Sweden) submitted at family).
Living wage.
AGM Dialogue with the
company is
ongoing
Questions
Eni (Italy) FFE Meeschaert Decarbonisation plan submitted to Ongoing
AGM
20 ENGAGEMENT REPORT Statements, votes, dialogues???
Meeschaert, Ecofi and FPF ???
???
submit first ever climate resolution in France
On June 29th, eleven investors, led by SfC founding
member Meeschaert Asset Management, submitted a
climate resolution to the AGM of French oil giant To-
tal, against the advice of its Board of Directors. The
resolution, co-presented by two further SfC mem-
bers, Ecofi and Friends Provident Foundation, as well
as other institutional investors, asked Total to inte-
grate its financial statements:
• including information about the company’s strate-
gy in order to align its activities with the objectives
of the Paris Agreement;
• specifying an action plan for the reduction in abso-
lute value, in the medium/long term, of the direct
or indirect greenhouse gas emissions of the com- “It is a great result, considering that it was the first cli-
pany’s activities (Scope 1, 2 and 3); mate resolution submitted at a French AGM and it was
• disclosing information about the means used by the opposed by the board of directors and some big proxy
company to implement such objectives. advisors”, explains Aurélie Baudhuin, deputy CEO at
Meeschaert AM and president of Shareholders for
Change. “It demonstrates the shareholders’ willingness
to encourage the Total Group to integrate a concrete and
operational action plan into its Climate Strategy”.
16.8% 11.2%
voted in favour ABSTAINED
of the resolution (showing an indirect
support)
ENGAGEMENT REPORT Statements, votes, dialogues 21???
??? Etica and Meeschaert AM
Fondazione Finanza
???at H&M’s AGM
submit resolution
On May 7th, Fondazione Finanza Etica submitted a Due to the Covid-19 emergency the H&M resolution
resolution at the Annual General Meeting of Swedish was submitted in streaming, from home,
fast fashion giant H&M with the help of Meeschaert by Fondazione Finanza Etica
Asset Management.
The resolution asked the company to fully disclose The resolution got 3.6% of votes in favour from 419
the sustainability targets that must be fulfilled by shareholders, including Amundi, Blackrock, BNP Par-
all members of the senior executive team (to trigger ibas, CalPERS, CalSTRS, Calvert, Christian Brothers
variable remuneration) and annually report the per- Investment Services, Desjardins, Natixis, Evangeli-
formance of senior executives against those targets. cal Lutheran Church in America, Robeco, Michigan
Moreover, it asked to include precise targets on the Catholic Conference, Nordea, Church of England and
improvement of worker health, safety and wage prac- Walden.
tices along the group’s supply chain, with specific tar- Considering that 77.5% of voting shares are held by the
gets related to living wage, as requested by the Clean Persson family, this means that 16% of voting shares
Clothes Campaign. not held by the family voted with FFE.
22 ENGAGEMENT REPORT Statements, votes, dialoguesCompany Lead Supporter Issues
???
Actions Status
???
Nokia (Finland) ???
Ericsson
(Sweden)
Forced labour in the
Hexagon Letter to
supply chains of
(Sweden) Ethos Ecofi, Etica companies/ Ongoing
European technology
ASML (NL) Conference calls
companies
NXP (NL)
Infineon
(Germany)
Meeting with the
company in
Naturgy Ethos, Just Transition, fossil December 2019 Successfully
all SfC members
(Spain) Fundación fuels in Madrid as completed
part of SfC
winter meeting
Ethos leads a new engagement project
with technology companies
In September, Swiss member Ethos Foundation launched menting policies and practices across seven areas:
a new engagement project with six companies belong- commitment and governance, traceability, purchas-
ing to the ICT sector (information and communication ing practices, recruitment, worker voice, monitoring
technology): Nokia, Ericsson, Hexagon, ASML, NXP and and remedy. ICT companies are encouraged, among
Infineon. The engagement has been done also on behalf others, to reward good labour practices by suppliers,
of all SfC members with the involvement, for some com- disclose supplier lists, implement a supplier code of
panies, of two network members: Etica Sgr and Ecofi. conduct based on the four ILO core labour standards
Due to their long and complex supply chains, often and include unannounced audit visits in the supplier
located in higher risk countries such as China or Ma- monitoring process. The engagement started with a
laysia, ICT companies are particularly exposed to the letter to the chairman of the board of all six compa-
risk of forced labour. This is the reason why Ethos nies requesting a conference call. The dialogue with
is asking to assess and address this risk by imple- the companies will continue throughout 2021.
ENGAGEMENT REPORT Statements, votes, dialogues 23Company Lead
???
Supporter Issues Actions Status
???
??? Export of bombs to
Questions at
AGM.
Saudi Arabia, involved Letter to
Rheinmetall*
BKC, FFE - in Yemen war, with Norwegian Ongoing
(Germany)
violations of human pension fund
rights (major investor
in Rheinmetall).
Setting up
Plenum sustainability audit and Calls and
Successfully
Investment AG BKC ABS engagement process meeting with the
completed
(Germany) (fossil fuels/climate company.
change)
Engagement via
Hannover Rück Sustainability strategy video call as part
SE BKC all SfC members (fossil fuels/climate of SfC winter Ongoing
(Germany) change) meeting in
December 2020.
Export of weapons to
ThyssenKrupp* Letter to
BKC, FFE - countries involved in Ongoing
(Germany) company
human rights violations
* Critical shareholding was adopted with Rheinmetall and ThyssenKrupp.
24 ENGAGEMENT REPORT Statements, votes, dialogues???
???
SfC asks the Norwegian Fund to divest from Rheinmetall
???
A group of European institutional investors and NGOs, Sustainable Investment Research at BKC. “We will
led by SfC’s founding members Bank für Kirche und continue our engagement to ensure that the new criteria
Caritas (BKC) and Fondazione Finanza Etica, sent a will be included in the fund’s ethical guidelines, leading
letter to the Norwegian pension fund on May 14th. to a critical dialogue with the company and probably to a
In the letter, they called on the fund to reconsider divestment from Rheinmetall”.
its investment in the German defence group Rhein- As early as 2017, Bank für Kirche und Caritas and Fon-
metall (ca. €114m, 2.57% of the company’s shares dazione Finanza Etica have been calling on Rhein-
as of 31 December 2019), which supplies bombs to metall’s Executive and Supervisory Boards, at the an-
Saudi Arabia for Yemen war, and to enter into a nual general meetings of the company, to refrain from
critical dialogue with the company on its arms ex- exporting arms to countries involved in or contribute
port practices. to human rights violations. So far Rheinmetall has ig-
In June, a government-appointed commission, which nored these appeals.
was entrusted with reviewing the ethical investment
Source: Norwegian fund
guidelines of the Norwegian fund, published a report
in which it recommended to exclude from the Fund’s
portfolio companies selling weapons to countries in-
volved in armed conflicts where there is an “unac-
ceptable” risk weapons are used in military opera-
tions violating international humanitarian law. The
breach must be “serious and systematic”. The chair-
woman of the commission specifically mentioned the
example of the “Yemen war”.
The review of the fund’s guidelines will be discussed
by the Norwegian parliament. In October, BKC, FFE
and a number of German NGOs have sent a letter to
the Norwegian Ministry of Finance to support the de-
cision-making process.
“The fact that our request has been included in the com-
mission’s recommendations can be considered a first, im- Norwegian fund’s investment in Rheinmetall
portant success”, explained Tommy Piemonte, Head of between 2007 and 2019
ENGAGEMENT REPORT Statements, votes, dialogues 25SfC engagement Network and member-driven engagement (with support) on 38 companies
was focussed A total of 39 companies have been engaged through network-driven and
on human rights, member-driven engagement (with explicit support).
The most recurring issues of SfC’s members questions, resolutions or
climate and votes for these two strategies have been related to human rights/work-
tax practices er rights (54%), climate/environment (27%) and tax practices (10%). 100%
of engaged companies are based in Europe, in particular in Germany,
France, Spain, UK and Sweden.
Half of engaged companies belongs to the Oil&Gas/Energy and Tech-
nology/IT sectors.
These figures include network-driven as well as member-driven en-
gagement with the explicit support of other members. It doesn’t include
single members’ engagement without explicit support of one or more oth-
er members (see above for details).
3. Engagement led by a single member on behalf
of the whole network
In this third engagement strategy, a single member of SfC launches an en-
gagement project with one or more companies, based on its own research
and evaluations, on behalf of all SfC members without an explicit support
or joint effort of any other member. The results of the engagement and the
acquired know-how are shared with all members.
This form of engagement is adopted, in particular, in pioneering en-
gagement initiatives, with companies/issues that are still not well known
in the financial sector: the so-called “orphan issues”.
Company Lead Issues Actions Status
Fossil fuels/climate
DZ Bank Letters and calls with the
BKC change; nuclear weapons; Ongoing
(Germany) company.
tax policy.
Letters to UN Namibian
Namibian
UN biological weapons officials and
government BKC Ongoing
convention intergovernmental
(Namibia)
organisations.
26 ENGAGEMENT REPORT Statements, votes, dialogues???
BKC engages Namibia on biological weapons ???
???
In January Bank für Kirche und Caritas has started to
engage Namibian government, asking to accede to the
UN Biological Weapons Convention. This is the first
engaging of a sovereign State for SfC.
“We address you today as investors in Namibian gov-
Haiti
ernment bonds and on behalf of the European insti-
Kiribati,
Micronesia,
Niue, Samoa,
Tuvalu
tutional investor network Shareholders for Change
Comoros
(SfC). We would like to encourage Namibia to continue
on its path towards acceding to the Biological Weapons
Convention”, reports the letter sent by BKC among
others to the Ambassador of Namibia to the United
Nations.
178 6 12
States Signatories States not
Parties party
Bonds from Namibia have long been one of BKC’s
bond investments. However, since the 1st of January
2020, BKC has reviewed its exclusion criteria for gov- Status of universalization of the BWC (May 2017)
ernment bonds adding the criterion “non-ratifica-
tion of UN Biological Weapons Convention”. Namibia representatives and diplomats as well as suprana-
is one of the few states that have not yet acceded the tional organisations entrusted with the UN Biological
convention. Instead of divesting from Namibian Weapons Convention; then started promising dis-
bonds, BKC has decided to engage the government. cussions with all concerned parties. The importance
Namibia in fact, has a solid position on key sustaina- of the UN Biological Weapons Convention has been
bility criteria and it appears to be no longer opposed officially acknowledged. Namibia finally will discuss
to accede the convention. BKC started sending a the accession to the UN Biological Weapons Conven-
number of letters to various Namibian government tion in government circles.
ENGAGEMENT REPORT Statements, votes, dialogues 27Company Lead
??? Issues Actions Status
???
Johnson Controls
Forma Futura
??? alleged sexual harassment Letter
Completed
(some questions remain
(Ireland)
open)
Stora Enso
Forma Futura legionella outbreak Letter Unsuccessfully terminated
(Finland)
Becton Dickinson
Forma Futura ethylene oxide emissions Letter Successfully completed
(USA)
IBM discrimination lawsuit
Forma Futura Letter. Ongoing
(USA) (a.o.)
Skanska
Forma Futura alleged corruption Letter. Successfully completed.
(Sweden)
Carrefour alleged slave labour in
Forma Futura Letter Ongoing
(France) Brazil
SwissLife ESG criteria in
ABS Letter Ongoing
(Switzerland) investments
Zur Rose Sustainability of supply
ABS Letter Unsuccessfully completed
(Switzerland) chain
Indra*
Fundación Export of weapons Participation in AGM Ongoing
(Spain)
Endesa*
Fundación Energy poverty Participation in AGM Ongoing
(Spain)
* Critical shareholding was adopted with Indra and Endesa.
28 ENGAGEMENT REPORT Statements, votes, dialoguesfair-finance engages external asset managers on fossil fuels
SfC’s Austrian founding member fair-finance invests half of SfC) asked all asset managers to divest from com-
part of its assets in funds managed by external asset panies which generate more than 5% of their revenues
managers. For this reason, fair-finance also engages as- from fossil fuels. Divestment from seven companies in
set managers on specific issues. In 2020 the main focus the Oil&Gas sector was completed in the second year
was on fossil fuels. Due to stricter criteria applied for the half. Shares of a further company (Luckin Coffee) were
award of the Austrian Ecolabel, fair-finance (also on be- sold due to alleged accounting fraud.
Company Lead Issues Actions Status
Letter to asset
Total (France) fair-finance fossil fuels/climate change Completed. Divestment
manager
Letter to asset
Merck (Germany) fair-finance fossil fuels/climate change Completed. Divestment
manager
Letter to asset
Repsol (Spain) fair-finance fossil fuels/climate change Completed. Divestment
manager
Letter to asset
OMV (Austria) fair-finance fossil fuels/climate change Completed. Divestment
manager
Letter to asset
Valero (USA) fair-finance fossil fuels/climate change Completed. Divestment
manager
Letter to asset
Tatneft (Russia) fair-finance fossil fuels/climate change Completed. Divestment
manager
Letter to asset
Neste Oil (Finland) fair-finance fossil fuels/climate change Completed. Divestment
manager
Luckin Coffee Letter to asset
fair-finance alleged accounting fraud Completed. Divestment
(China) manager
ENGAGEMENT REPORT Statements, votes, dialogues 29Some of the engagement activities of UK member Friends Provident
Foundation with European utilities on a just transition to net-zero emissions
have been done also on behalf of SfC, although without the explicit involve-
ment of any other SfC member. By the end of 2020, two of these engagement
processes had been successfully completed.
Company Lead Issues Actions Status
Friends Just transition to net-zero Letter to asset
E-on (Germany) Ongoing
Provident emissions manager
Friends Just transition to net-zero
Centrica (UK) Participation in AGM Ongoing
Provident emissions
Friends Just transition to net-zero
Drax (UK) Participation in AGM Ongoing
Provident emissions
Friends Just transition to net-zero Letter to asset
RWE (Germany) Ongoing
Provident emissions manager
SfC is big in Japan with Etica Sgr
Sony’s stock option plan has a vesting period of just Etica Sgr expressed its positions primarily on gov-
one year, thus below the three years’ threshold re- ernance issues, concerning Board independence and
quired by Etica Sgr in its engagement policy. gender diversity; remuneration and cross-sharehold-
Panasonic and Mitsubishi Estate didn’t submit to ing, by voting at AGMs and publishing its voting activ-
shareholders’ vote their remuneration policy, while ity. In general, Etica Sgr voted in favour of proposals
women are not sufficiently represented within Denso on ESG submitted by other shareholders.
Corp.’s Board of Directors. Although SfC’s engagement activities are mostly fo-
These are just some of the reasons why Etica Sgr voted cussed on European companies, the relative impor-
against board proposals at ten annual general meet- tance of non-European markets has increased over
ings of Japanese companies, between June and July. time: in 2019 just two companies were engaged on
This was done also on behalf of SfC. behalf of SfC in Japan.
30 ENGAGEMENT REPORT Statements, votes, dialoguesCompany Lead Issues Actions
??? Status
???
Sony ( Japan) Etica Stock option plan Vote at AGM ??? Ongoing
Panasonic ( Japan) Etica Remuneration policy Vote at AGM Ongoing
Mitsubishi Estate
Etica Remuneration policy Vote at AGM Ongoing
( Japan)
Denso Corp.
Etica Gender diversity Vote at AGM Ongoing
( Japan)
Taiheyo Cement Remuneration policy
Etica Vote at AGM Ongoing
( Japan) Gender diversity
Kyocera Corp.
Etica Gender diversity Vote at AGM Ongoing
( Japan)
Hitachi Ltd
Etica Remuneration policy Vote at AGM Ongoing
( Japan)
Gender diversity
TDK Corp. ( Japan) Etica Vote at AGM Ongoing
Remuneration policy
Itochu Corp.
Etica Remuneration policy Vote at AGM Ongoing
( Japan)
Gender diversity
Toyota Motor
Etica Remuneration policy Vote at AGM Ongoing
Corp. ( Japan)
Board composition
ENGAGEMENT REPORT Statements, votes, dialogues 31Besides its engagement activities with other SfC members, French
member Ecofi has focussed on the engagement with European small-me-
dium companies, in particular in the renewable energies sector, also on
behalf of the SfC network.
Company Lead Issues Actions Status
Carl Zeiss Environmental and social
Ecofi Call with company Ongoing
(Germany) policies
Environmental and social
VAT (CH) Ecofi Call with company Ongoing
policies
Logicor (France) Ecofi Climate strategy Call with company Ongoing
Albioma (France) Ecofi Environmental impact Call with company Ongoing
Climate strategy
Voltalia (France) Ecofi Call with company Ongoing
Environmental Impact
Climate strategy
Argan (France) Ecofi Call with company Ongoing
Environmental Impact
32 ENGAGEMENT REPORT Statements, votes, dialoguesOn the other hand, Etica Sgr, has confirmed its focus on Italian com-
panies, including some SMEs, which were engaged mainly on governance
issues, also on behalf of the SfC network.
Company Lead Issues Actions Status
Sabaf (Italy) Etica Remuneration policy Vote at AGM Ongoing
Snam (Italy) Etica Board composition Vote at AGM Ongoing
Remuneration policy
DiaSorin (Italy) Etica Vote at AGM Ongoing
Stock option plan
Terna (Italy) Etica Board composition Vote at AGM Ongoing
Sol (Italy) Etica Remuneration policy Vote at AGM Ongoing
A2A (Italy) Etica Remuneration policy Vote at AGM Ongoing
Italgas (Italy) Etica Governance Vote at AGM Successfully completed
Buzzi Unicem
Etica Remuneration policy Vote at AGM Ongoing
(Italy)
Hera (Italy) Etica Remuneration policy Vote at AGM Ongoing
Prysmian (Italy) Etica Remuneration policy Vote at AGM Ongoing
Technogym (Italy) Etica Remuneration policy Vote at AGM Ongoing
Brembo (Italy) Etica Remuneration policy Vote at AGM Ongoing
Remuneration policy
Erg (Italy) Etica Vote at AGM Ongoing
Dividend policy
Remuneration policy
Campari (Italy) Etica Vote at AGM Ongoing
Stock option plan
ENGAGEMENT REPORT Statements, votes, dialogues 33The engagement with six US companies on tax practices, launched by
Ethos Foundation at the end of 2019, continued throughout 2020 with en-
couraging results: all companies replied to the letters and entered into a
dialogue with Ethos, that will continue at least until the end of 2021.
Companies Lead Issues Actions Status
Alphabet-Google
(USA), Amazon
(USA), Apple Letters to
(USA), Facebook Ethos Tax practices companies/Calls/ Ongoing
(USA), McDonalds Email exchanges
(USA), Starbucks
(USA)
Fondazione Finanza Etica continued its engagement with Italian big
caps, focussing in particular on tax practices and climate policies. Some of
its initiatives were done also on behalf of the SfC network.
Company Lead Issues Actions Status
Conference call;
Assicurazioni Investments in coal
FFE Questions submitted Ongoing
Generali (Italy) Tax practices
at AGM
Enel’s dominant position
Questions submitted
Enel (Italy) FFE in the market for energy Ongoing
at AGM
distribution
Engaging US Big Tech
corporations
on tax trasparency
34 ENGAGEMENT REPORT Statements, votes, dialoguesSfC- Shareholders for Change at a glance
SfC Member December 2017
Bank für Kirche und Caritas eG (Germany) - BKC
€bn AUM Ecofi, Groupe Crédit Coopératif (France) - Ecofi
29 Etica Sgr, Gruppo Banca Etica (Italy) - Etica
28 fair-finance Vorsorgekasse (Austria) - fair-finance
27 (11) Fondazione Finanza Etica (FFE, Italy) - FFE
26
(10) Fundación Finanzas Eticas (Spain) - Fundación
25 (9)
24 Meeschaert Asset Management (France) - Meeschaert
23 December 2018
22 Ethos. Swiss Foundation for Sustainable Development
21 (7) (Switzerland) - Ethos
20 Friends Provident Foundation (UK) - Friends Provident
19
18 February 2019
17 Forma Futura Invest Inc.(Switzerland) - Forma Futura
16 July 2019
12 12 02 07 Alternative Bank Switzerland (Switzerland) - ABS
2017 2018 2019 2019
HOW WE ENGAGE
IN-PERSON DIRECT
SENDING LETTERS, MEETING PARTICIPATION
E-MAIL, CALLS WITH COMPANY IN AGM
01 02 03
ENGAGEMENT REPORT Statements, votes, dialogues 35Engagement
Strategy LETTER
satisfactory unsatisfactory no answer
answer answer
LETTER
call
answer no answer
engagement
positive ongoing closed
closure engagement
exclusion
36 ENGAGEMENT REPORT Statements, votes, dialoguesMain issues ???
???
???
A B C
Workers’ rights Fiscal practices CO2 emissions
and human rights and tax justice and climate change
Styles of engagement (in 2020)
99
Shareholder
activism
5
Critical
shareholding
ENGAGEMENT REPORT Statements, votes, dialogues 37What is SfC-Shareholders for Change?
SfC – Shareholders for Change is a network SfC focusses on three main issues:
for investor engagement dedicated • workers’ rights and human rights;
to institutional investors. It was launched • fiscal practices and tax justice;
on 6 December 2017. Its 11 members • CO2 emissions and climate change.
manage assets for a total of €28bn:
SfC members adopt two different styles
• Alternative Bank Schweiz (ABS, of engagement:
Switzerland) • Shareholder activism: engagement
• Bank für Kirche und Caritas eG (BKC, with companies that, normally, are
Germany) already part of an investing universe
• Ecofi, Groupe Crédit Coopératif (France) selected according to ESG criteria;
• Ethos Foundation (Switzerland) • Critical shareholding: engagement with
• Etica Sgr - Responsible Investments, companies that are targeted by NGOs’
Gruppo Banca Etica (Italy) campaigns or are allegedly involved
• Fair-Finance Vorsorgekasse (Austria) in serious environmental or social
• Fondazione Finanza Etica (FFE, Italy) controversies and are normally not part
• Forma Futura Invest (Switzerland) of an investing universe. This approach
• Friends Provident Foundation (UK) is often implemented in cooperation
• Fundación Finanzas Éticas (Spain) with NGOs.
• Meeschaert Asset Management (France)
Critical shareholding was adopted in five
The network’s first goal is to engage cases in 2020 (out of 104 engagement
with companies, countries or institutions, initiatives in total).
participating in AGMs, submitting letters
as well as coordinating meetings and calls,
in order to persuade them to improve
their social, environmental More information on:
and governance track record. www.shareholdersforchange.eu
38 ENGAGEMENT REPORT Statements, votes, dialoguesPublished on 3 December 2020 by SfC - Shareholders for Change
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